It's now being reported that Verizon and Yahoo are exclusively negotiating. That's as close as anyone has gotten since Microsoft made an offer years ago.
Verizon is really doing a big transition with this acquisition and their AOL acquisition. They've acquired alot of valuable web space to put adds on/monetize. This is a probably good news for Yahoo employee's as Verizon then has a vested interest in keeping the company running and not splitting it up into pieces like a PE firm may be more inclined to do.
The one interesting thing I've heard is that Verizon isn't interested in Yahoo's patent portfolio, which means it could still be up for grabs.
Hopefully its bought by a Microsoft/Google consortium and very liberally cross licensed rather than a private equity firm who will look to more aggressively monetize it.
I also heard that Tim Armstrong, formerly of Google with Mayer will lead the combined AOL/Yahoo company, which means that Mayer probably isn't coming along as part of this deal. I think most people expected this.
If this ends up going through for the reported 3.5 billion, then Verizon has bought a significant portion of traffic on the web for roughly 8 billion (AOL was acquired for 4.4 Billion).
This could end up looking like a very good acquisition in a few years!
I did a double take when I read Tim Armstrong as the new CEO.
I remember reading a scathing in-depth piece on him some time ago. Fired a guy in the middle of a meeting, shamed some employees that had delivery complications with their children. I was surprised he's still around.
I suppose the new CEO will be as criticized and unloved as the old one.
Tim and Marissa are both characters. I wonder if they are actually any good. After all, how easy would it be to "succeed" at Google 10 years ago?
That's why I'm always a little skeptical about hiring leaders from one-trick pony companies. Many come to mind. Intel (x86), VMWare (vSphere), Google (ad words) and the list goes on.
It's likely you could be a very incompetent leader at these companies and still show results because the product sells itself &/or has a virtual monopoly for a number of years.
I have seen very, very few Intel execs leave and be successful outside of Intel. In fact, I can't think of any. Are we now seeing the same from Google?
Marissa is pretty good (she was the exec sponsor for several of my first projects at Google). Very large ego, but she really is very smart and exceptionally hard-working. She was responsible for some of Google's more innovative org-structure decisions (eg. the APM program), and IMHO Search and Maps really benefitted from her UI restraint while she was there.
I know a few people at Yahoo, and the good employees (i.e. the ones who didn't just do 15 minutes of work a day while "telecommuting") tended to speak highly of her too.
I think what you're really seeing is Warren Buffett's aphorism, "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact." People tend to overestimate the effect of a CEO on the business's returns. Usually the prime drivers of a business's success are external to the business itself (eg. customer preferences, technological shifts, competitive landscape).
You can draw your own conclusions about what that should mean about CEO pay, but unfortunately human beings are hard-wired with a cognitive bias to ascribe effects to people, rather than to systemic factors.
(As a side note: I wonder if this is what'll happen to Musk regarding Tesla. As amazingly innovative as Tesla has been, the auto industry has a reputation for terrible economics.)
Musk may ultimately fail at Tesla, but he can hardly be considered a one trick pony after Paypal and SpaceX. If you would have asked me to pick two industries with very high barriers to entry and an existing cozy-with-regulators clique I would have picked rockets and transaction processing.
On the other hand, I tried to short Tesla recently and couldn't get any shares.
If I had to justify ending a telecommuting program in order to influence engineers to leave willingly before a large round of layoffs were planned, I would tell all my remaining employees that those telecommuters were lazy and only worked 15 minutes a day. Seems like business-cult behavior to label some employees as "the good employees" and everyone else as "the bad employees" where "good" employees work weekends and don't take vacations and so forth. Slippery slope.
I knew people at Yahoo before Marissa took over, and they already knew those telecommuters were lazy. Work seemed very unevenly distributed at Yahoo. Coming from Google c. 2009-2014, most of my coworkers were reasonably hard workers - there were some variations in individual productivity, but most people pulled their weight, and the ones who didn't were fired. The stories I heard from Yahoo friends & acquaintances were that they were pulling 10 hour days + weekends because their teammates would work 2 hours, or that their teammates would telecommute and AFATCT never actually do any work. That bred a lot of resentment, and indeed made a lot of Yahoo's more-hardworking employees jump ship.
I appreciate the insight I wish stories like these could have been present in more of the discussions regarding Yahoo that I've been reading. Maybe ending telecommuting was the right call. But it seems to me that systemic laziness in engineering circles are not the product of location but rather the product of process, review, and so forth. Perhaps also recruitment and management were very ineffective as well.
I would argue that systemic lazyness is usually the product of employees realizing that everything they do is pointless, and hence not bothering to do anything. And so Marissa's top priority at Yahoo should've been to find a reason for the company to continue to exist. Unfortunately, this is hard enough in a small startup where you need to convince 2-3 people to commit quickly to a choice of action and follow through on it, let alone a large one where you need to convince 20-30K, most of whom have already checked out. And so unfortunately, the first thing any turnaround CEO has to do is get everyone who's not committed to the company's success off the bus. (Oftentimes, you're doing them a favor anyway through this; coasting through life in the hopes that you won't be noticed is not a winning strategy long-term, and this frees them up to take other jobs where what they do actually does have a purpose.)
I was there when it happened; it felt like the right call to me and my team. In fact none of the performance related terminations had us scratching our heads.
I was a part of a startup (interClick) that got acquired before MM became CEO and our experience of the rest of the org was pockets of smart dedication drowning in a mass of serfs passively resisting the will of the fiefdoms to which they belonged.
It seemed to us that what MM should have done is broken up the fiefdoms and dismiss the feudal lords that reigned before revitalizing the suite of properties and expanding mobile/video.
If I'm a hard worker, and I see people doing nothing all day, nothing would motivate me like firing them.
eg look at people working remotely, check vpn logins, and if they weren't logged in while working remotely, ask them for a reasonable explanation (maybe they were working entirely locally, but probably not), then terminate.
Edit based on your edit: Probably not quite as abruptly as you suggest - usually you need a pattern of underperformance to fire without risking a lawsuit. But Yahoo underwent several rounds of performance-based lawsuits. I think her big mistake there was not cutting once and cutting deep - multiple rounds of layoffs are much more demoralizing than getting rid of all the underperformers at once - but hey, Monday-morning quarterbacking. We aren't the ones at the top making the call.
The ultimatum was: if you can't convince us that you're productive remotely, you must start coming in to office. I know a couple of excellent techies who continued to work remotely after.
Or judge them by what they contribute to the project -- not by how often they log in, or how long their butts sit happily joined with their chairs.
(Fine-grained) surveillance breeds distrust. The moment I hear that a company I work for is aggressively using surveillance-ware to evaluate employee performance is the moment I start looking for another job.
I'm not sure why your comment needs to be so dismissive. The poster made it clear that this is something they heard second hand. I imagine with a company as large as Yahoo we will never get an authoritative answer to exactly how much value the telecommuting employees were adding.
I don't know a single person at Yahoo and I don't work there but I remember reading articles when MM implemented the new rules for telecommuting and if I remember correctly most painted the policy negatively. I'm glad to read another perspective on the topic even if it is coming from someone with only second hand knowledge.
It's obviously good to be skeptical of second hand experiences but I'm not sure they should be dismissed wholesale. I imagine part of the point of HN is to share our personal experiences. I've never worked at Boeing or Northrup but I have enough friends/colleagues who have or currently do that I can form some informed opinions on what it's like working there.
I was in Yahoo long before Marissa joined. And I saw her in action for 3 years. Some of those "work from home" people were very good, and were all given exemptions to continue working from home. But the lazy ones, some who I knew to be lazy, were told to shape up.
I experienced Marissa's ire firsthand too. But despite that, I give her high marks for trying. Yahoo had been ossified long before she got there; read PG's essay on Yahoo's culture. Blaming her for Yahoo's troubles is like blaming Dönitz for Germany's loss in WW2.[1]
Google is far from one trick pony. Android is the most dominant operating system in the world. YouTube the most dominating Video sharing website in the world. Gmail the most widely used web-based email service. Google maps...
If my experience being part of the Amazon Echo team has taught me anything, it's that the most simple looking things (like Search, or Voice UI) require the most complex skill set.
Even if Google got just one thing right in your eyes (aka Search/AdWords), rest assured, underneath they employed a considerable number of disparate 'tricks' to get that right-- you just chose to umbrella dismiss those many tricks as 'One Trick' (TM).
per the other commenter, most of those are acquisitions and, outside of Youtube, what's the P&L for those other products sans search advertising?
I'm sure Echo is very complex, but it's usually not the complexity of the problem that is important from a business standpoint, but choosing which problem to solve.
At the risk of getting down voted by folks not in the know, Adwords was also such an infringement (just done much much better) of an Overture patent [1] that if it hadn't been for Yahoo buying up Overture and later settling the lawsuit, our views on Google's success might be very different today.
In July 2005, Google acquired Android Inc. for at least $50 million, whose key employees, including Rubin, Miner and White, stayed at the company after the acquisition.
Please ignore the folks who were snarky and downvoted you.
Folks like to think this was really an acquisition, but they are mostly wrong :)
In particular, Google basically acquired some people. Anyone who thinks they had a real OS at that point, and anything that approached even the first version of android, is smoking something.
Source: I did diligence on the acquisition, and I watched them develop android at Google.
A question that can be answered by pasting it into a search engine is very unlikely to provoke an insightful discussion, and is not good use of HN real estate.
Amazon is the most impressive company, IMHO. I love my Echo, and I read on a "paperwhite" Kindle even though I have an iPad.
I think Amazon could take over the phone market. Just make a phone that is an "Amazon remote control" with shopping, music, and video streaming built in, combined with Alexa that "just works". (Or a color e-ink phone with no video support, but a long battery life.)
>ust make a phone that is an "Amazon remote control" with shopping, music, and video streaming built in
The problem is the world is much bigger than Amazon. I buy from Amazon often, but I don't want it to be at the center of everything I do. I think most people would agree. That's why all their phones failed, and why the facebook phone failed too.
The elephant in the room: Sheryl Sandberg (VP of sales and ops at Google before FB).
John Doerr was also a sales executive at Intel in the late 70s.
Also, most executives don't become famous. There are dozens of ex-Google and ex-Intel executives you've never heard of chugging away as executives at other companies, presumably succeeding (because they haven't been fired or demoted). But you've never heard of them because they aren't wildly or prominently successful.
Elephant in the room or exception that proves the rule?
I would also consider Doerr as starting his career at Intel (back when it didn't have a virtual monopoly) rather than being a senior leader.
I think these one-trick ponies are good places to start careers, I just think the market should be more wary when hiring exec leadership (VP to c-level) from them.
High-flying companies in SV have become another form of cover-your-ass pedigree that allows the entire management chain to pass the buck on hiring decisions. I see this at the lowest level from IC engineering hires up to the CEO. Hiring someone/investing in their company/putting them in any position of trust, after they've been "minted" at the successful big company is "safe"; it hardly matters what the person did, or what results they achieved, just that it's "on their resume". Whereas hiring someone from a scrappy startup that worked their ass off and executed but wasn't in a position to influence strategy will be branded a "loser" and in a much worse position to get hired vs. the safe bigco candidate.
This is really a big problem/opportunity, and it's all down to our inability to measure/attribute individual performance in a team setting. But it does make you wonder, from a career-planning perspective, should I optimize for "name" or actual learning? Should we all follow Sandberg's advice and just "Get on a rocket ship" and "let our careers take care of themselves" even if the company is already on a breakout trajectory before we got there? As someone who's spent a lot of time optimizing for actual learning, I'm starting to think it's the losing strategy, but then, all my friends work for big companies like Apple / facebook / google, so maybe their influence is just rubbing off on me.
You can be or you can do. Right now we're in a phase (with lots of cheap money) where it's better to be.
When the money becomes harder to scratch out it'll be better to be able to do.
I like this quote by John Boyd, who wrote the book on aerial combat.
“Tiger, one day you will come to a fork in the road,” he said. “And you’re going to have to make a decision about which direction you want to go.” He raised his hand and pointed.
“If you go that way you can be somebody. You will have to make compromises and you will have to turn your back on your friends. But you will be a member of the club and you will get promoted and you will get good assignments.”
Then Boyd raised his other hand and pointed another direction. “Or you can go that way and you can do something – something for your country and for your Air Force and for yourself. If you decide you want to do something, you may not get promoted and you may not get the good assignments and you certainly will not be a favorite of your superiors. But you won’t have to compromise yourself. You will be true to your friends and to yourself. And your work might make a difference.”
He paused and stared into the officer’s eyes and heart. “To be somebody or to do something. In life there is often a roll call. That’s when you will have to make a decision. To be or to do. Which way will you go?"
From where I'm sitting, I see zero inflation, a federal reserve that's happy to keep buying assets to stimulate growth, a sluggish economic recovery that's led to 1-2% growth in the US, meanwhile 50% growth in aggregate household nominal wealth since 2010 (that's from the fed's survey of consumer finances) so everyone with home equity and stocks feels rich, and bigger-than-ever VC fundraising from LPs.
I'm gonna get back to work now, but, as much as I'd like this phase of ZIRP-driven asset price inflation and general ethos of cheap money/greed to end, I just really don't see it, at least not in the next 10 years. Please, tell me I'm wrong, I want to be, I just don't see it.
Well, the growth simulation with fake money leads to sub-optimal decisions in the finance world.
I don't think policy change will come from genuine improvement of economic conditions but from let's say Deutche Bank blowing up (or something like that). Let's not forget that apparently there is ~quadrilion dollars worth of derivatives in the wild (it's hard to find reliable info)
I think we see a top in the stock market and asset price inflation in the next 6-12 months. What comes after is sort of TBD.
Eventually we'll have real growth (and likely a lot of inflation with it), but what happens between now and then, how long it takes, how bad it gets, is TBD.
Both. You shouldn't think in binaries, and should recognize that your career is long and will have many different phases.
When you're young - first couple years out of college, or even while you're in college - it's time to optimize for learning. Maybe that means working at a startup, maybe that means founding one, maybe it just means going to a highly-regarded research university and working on some projects with the professor. If you didn't get into a highly-regarded university, it means picking a topic of interest and studying intently about it on your own.
Eventually at some point, you should get pedigree on your resume. A good university would do this, but so would working at a well-regarded blue chip or fast-grower. And most of them are more than willing to hire out of startups, if you have an interesting project that makes you stand out from the crowd.
Stay at the company as long as it remains interesting, where you're learning new things and developing new skills. Leave when it gets boring. Hopefully you've built up a nice nest egg in the process - big companies pay their high performers very well.
The worst thing is that I see myself falling into this trap. I get dismissive of people without the right "pedigree", but then I realize it's the worst form of mental laziness.
I wonder whether truly great companies are different. I think that, just like really great investors (Fred Wilson and Michael Seibel, to name two) have said, "just tell me what you're doing in simple language", implicitly saying "I trust my own judgment" (vs. some elaborate dance of social networking/signaling), I suspect hiring at really top-tier companies doesn't turn as much on pedigree as on some measurable element of skill, or actual work performance.
In any case, the people I admire most in this world are the contrarians who have the conviction to act on their beliefs, like the Big Short guys, or Billy Beane from the A's -- but that kind of thinking isn't career-friendly, AT ALL.
I also think Nassim Taleb has the right idea that "skin in the game is a moral imperative". In all cases where people pass the buck, the problem is that their interests (e.g. their own careers) are insufficiently aligned with those of their principals (the firms' investors). You want to really see what works, look at the guys who are playing with their own money (e.g. hedge funds, proprietary traders, closely-held companies), not the pundits on CNN.
> Certainly it's easier to look at education, corporate brand as signaling than to really dive into someone's skills and capacity to be successful.
Even more insidious because it actually works. The "average" Stanford CS major coming out of Google is very good. Your false-positive rate (they're actually not that great) is pretty low. However, your false-negative rate (if you didn't go to Stanford or work at Google, you're crap) is insanely high.
Why is Google hiring? If they're hiring to get someone to do a job, their setup makes sense. (A false positive - a bad hire - can be quite damaging, but a false negative - someone you fail to hire who would have been good - is not damaging at all, if in the end you hire someone good to do the job.)
But if Google is hiring for more than that - say, for what the employee will come up with on their own in their 20% time - then the false negatives could be extremely expensive to Google.
>But if Google is hiring for more than that - say, for what the employee will come up with on their own in their 20% time - then the false negatives could be extremely expensive to Google.
This hiring process, together with internal structure, is exactly why companies eventually stagnate. They hire for compliance and create an environment that values the same. There may be smart people in the organization, but great ideas are not compliant because they require change. This is why consultants and outside agencies are needed to come up with ideas - ideas are not welcome in many environments.
Sure Google and Intel don't have great executives that leave for other companies, if you exclude the really successful ones. /s
It's also incredibly rare for executives to leave these companies in the first place. They are compensated wildly; if they leave, it's usually to retire.
not sure why you feel the need to be sarcastic about this.
Marissa and Armstrong were big names coming out of Google that many would argue flamed out. The fact that Sheryl Sandberg makes what I would consider is a lateral move to another successful company doesn't really come into play.
I'd rather hire the leader from a company with a diverse set of products that was directly accountable for an independent P&L. You don't really get that at Intel as everything is a derivative of x86 and I don't think you get that very much at Google (where the real P&L that matters is still search advertising.)
I can speak specifically to Intel, that execs increasingly don't leave because they lack the necessary experience to go run an independent business. Sometimes they manage to get hired elsewhere and, in most cases, they flame out and either retire or return.
> That's why I'm always a little skeptical about hiring leaders from one-trick pony companies.
I'd put it this way: hyper-growth makes everyone look great, but hyper-growth is often a one-off event whose causes are obscure.
When someone gallops into town riding a white exponential, ask whether that person had any direct causal influence over the genesis of that exponential. If the answer is no, evaluate them as if they held the same position in an average firm.
Unless you designed Google's original search or AdWords, "worked at Google" =~ "worked at IBM."
> Unless you designed Google's original search or AdWords, "worked at Google" =~ "worked at IBM."
I'm not sure I agree. Think about all the infrastructure required to run those services; low-latency transactional databases, data centers, network engineering (peering, load balancing), etc., etc. Those are all enormous achievements that are rarely duplicated at other companies.
When you "ping google.com" and nothing comes back, do you assume that google.com is down, or that your Internet connection is down? What about "ping ibm.com"? :)
(P.S., ibm.com appears to block pings. Or it's down right now!)
I take it the commenter is talking more about business roles than engineering. To be sure, there are unique engineering problems that massive scale companies face.
For business leadership roles though, you often see people trying to coast on successes that they had little role in creating.
To be fair though, there are great leaders at all kinds of companies. And the success, money, and potential impact one can have at companies like Intel and Google attracts a lot of talented people. I think it's just a matter of not automatically assuming people are great just because of what's on their resume.
I work on Google Fiber and am continually impressed with the business folks too. It is hard work to dig up streets and install fiber, negotiate agreements necessary to provide TV service, provide high-quality customer service, etc.
Google (er, Alphabet) has a lot of employees, and maybe not every single one is the best in their field (they hired me), but overall I think that a Google tenure on your resume can be a meaningful positive signal for future employees.
At the very least, maybe they'll steal some of the really good ideas around here, like an internal social network. (Available for anyone using Google Apps, not just us ;)
Hopefully its bought by a Microsoft/Google consortium and very liberally cross licensed
I don't think such a consortium exists, Microsoft and Google are usually on opposite sides. Microsoft (along with Apple/RIM/others) bought the Nortel patents in 2011 and sued Google, Samsung, Huawei, and others. Google bought Motorola and its patents the same year and sued Microsoft. Patents are weaponized as soon as these companies acquire them.
That patent war was started by Microsoft under Steve Ballmer and both companies dropped it after Satya Nadella took over. I genuinely don't believe Microsoft under Nadella would go to patent war except defensively. Everything I've read about Ballmer leads me to believe he definitely shares similarities to the stereotype of the businessman trying to squeeze out as much money as possible.
Far stranger things have happened this year. Although, you're probably right - there will likely be big bucks involved in fighting over it. If a troll acquires those patents it would be dreadful news for everyone involved. I'd honestly rather see Microsoft or Google in charge of them.
I think Verizon is very close to realizing they're finally just becoming a utility and desperately want to stay in a higher-level game. But everybody completely ignores Verizon branded initiatives in this area (mostly because the combine being terrible with expensive). Buying existing brands is a much more likely path to success.
I read this acquisition as trying to take over as much of internet traffic "market share" as possible. Verizon is well into the online advertising game with AOL, so the larger piece of the pie they own the more control they have, and thus the better for them on the long term.
It makes sense. The best buyer had to be someone that isn't Google or Facebook but is significantly invested in online advertising.
>This is a probably good news for Yahoo employee's as Verizon
Good news for Yahoo shareholders. I have no faith that Verizon will turn Yahoo around. I'm not sure it's good news for employees. You're bringing in Verizon corporate culture into a Silicon Valley company - have fun.
Verizon's been pretty hands off with AOL in that regard, though that could change if Verizon gets more involved in trying to merge Yahoo and AOL obviously.
The first version of the article that appeared on the terminal cited 3.5 Billion. Infact the entire article has significantly changed since it was first published:)
They could be in the marshmallow manufacturing business for all I care, if it's not their core competency they'll suck at it. (There are a lot of third party ad-tracking/online surveillance companies to be more worried about since that's their entire bread and butter.)
It is deeply sad that there's even a chance that Yahoo will be sold for ~$5BN to Verizon, which bough AOL for $4.4BN, especially considering that AOL has 0.9% of the US web search traffic while Yahoo still has more than 10% and amazing agreements in place that allow it to show the best search results between Google and Bing. How is this maximizing value for shareholders exactly ?
Yahoo has been on sale for a long time, clearly there have been issues with buyers finding value. They probably have a point.
People don't see growth in Yahoo. They were on top before Google (I remember Yahoo was _my_ choice for a long time) and it seems they've just been existing, coasting on brand recognition but not accomplishing much. It's easy to see a future where Yahoo only goes slowly downward.
In a typical year (excluding the Alibaba sale or big write-down last year), Yahoo makes as much profit as Verizon's entire wireline unit.[1] Selling part of the FiOS network for $10 billion to buy Yahoo for less than $5 billion is a no-brainer. It'd be better to buy a healthier tech company, obviously, but Yahoo is what's on the market.
[1] While costing about $4 billion a year to run, versus $35 billion a year for Verizon's wireline division.
The Mozilla Organization has a partnership with Yahoo! to make them Firefox's default search engine [1]. Firefox was created by the Mozilla Organization which was created by Netscape. Netscape was acquired by AOL in 1999 [2].
Marissa Mayer is a terrible CEO. Unbelievable the amount of money she has been paid to flush the remainder of Yahoo down the drain with no strategy while employees suffer. Yahoo (net of BABA) is less than worthless.
I know she's unpopular, but she's hardly the first one who tried righting that ship without success. I think she's stabilized it and made people believe there was a possibility in turning around, giving it breathing room more than the previous three. You have to remember that when she came on board, Y! was taking water fast.
No one, no one could have saved it and made it relevant. I think she did a pretty commendable job trying.
> No one, no one could have saved it and made it relevant.
Agreed. I simply can't understand why we keep flogging this dead horse, Mayer or Verizon, none of it makes any sense. Am I missing something regarding the true value of Yahoo!?
I _believe_ the reason the horse keeps getting flogged is because a wide swath of HN doesn't believe Mayer had the skill set needed to make a real attempt to right Yahoo (and, arguably, her actions support that assumption).
> Agreed. I simply can't understand why we keep flogging this dead horse, Mayer or Verizon, none of it makes any sense. Am I missing something regarding the true value of Yahoo!?
As a stand alone entity, Yahoo simply had no real chance. Their only path to relevance was a complete remodel of their priorities ~10 years ago.
Verizon, honestly, doesn't make alot of sense but my guess is they think they can integrate it into their operations to make money. Idk how they would.
...giving it breathing room more than the previous three
One of the previous CEOs was the founder Jerry Yang. He made one of the most epic corporate investments when he fought for Yahoo to invest in Alibaba.
No one, no one could have saved it and made it relevant.
If we are going to set the bar so low, I can think of a lot of qualified people in the Valley that could have done as good or better job than Marissa. She made a whole bunch of bets and basically none of them panned out. Her top skillset was supposed to be Product Management and the best that has yielded are one-time decent Yahoo products becoming shittier.
Why do they have to throw hundreds of millions of dollars at people who aren't expected to turn things around? I thought the whole point of paying that money is that these people make the impossible possible.
Yahoo is apparently still worth ~$4 billion. For quite a while there, its nominal stock value was negative after dispatching Ali Baba, despite cash-on-hand in excess of zero.
I'm not a fan of Meyer's, but she managed to keep the beast alive, where her predecessors were killing it swiftly.
Making remote employees come in to actually work was the single best thing she did for the company. Unfortunately it wasn't enough as Yahoo fundamentally doesn't have anything competitive for employees to work on, hence the attempts to find that something with startup acquisition and killing off venerable old portals like Yahoo Games.
Makes me wonder...did Yahoo pay a premium for their engineers as of late? Surely you wouldn't go work there without some kind of compensation for the writing on the wall the past 10 years.
I believe that they have been paying a premium for ad managers, by the data point of a friend who got a nearly 50% bump when hired at their Boston office in the past year.
At the time of Mayer's hire, Yahoo had a pretty low chance at a highly successful turnaround. I think it's unfair to say she didn't have a strategy and that she purposefully let employees suffer.
Whatever she did failed to turn the company around but that alone doesn't make her a terrible CEO.
This fallacy needs to die. You cannot just subtract the value of Alibaba and declare the company "less than worthless". Company valuations don't work that way
Yahoo has significant debt. If Yahoo were willing and able to liquidate Alibaba or Yahoo Japan the proceeds would be used, at least partially, to pay off that debt. You cannot stick all of the company's debt on a select portion of the business and declare it worthless based on that.
Isn't the problem with them divesting both of those entities - Alibaba and Yahoo Japan, the outsized tax burden from the sale? I thought this was the reason it was a non-starter this past year.
Possibly, but I notice the vast majority of the deferred tax burden Yahoo has came on to the books at roughly the same time as the Alibaba investment, so the tax hit may already be reflected in the balance sheet.
The article talks about efforts to spin off the BABA part. Verizon is only buying certain pieces of Yahoo. Is it really that absurd to talk about the different pieces?
It is absurd to talk about separate assets without talking about where the liabilities go. Yahoo has over $16B in total liabilities. You cannot attach all the liabilities of a company to a specific part of its assets.
That depends on how the deal is structured and what happens to the other pieces. This is where mergers and acquisitions get complicated. Part of Verizon's price tag might be assumed liabilities from Yahoo. Maybe part of the Alibaba stake gets sold to cover them. Maybe it stays with whatever the holding company remnant will be. Can't tell from just a public balance sheet and a headline. However, assuming Verzion is going to take on all $16B of Yahoo's liabilities when they are getting a relatively small portion of the assets is ludicrous.
Makes sense. Do I understand correctly, then, that Verizon is taking on an unknown amount of Yahoo's debt as part of this deal, with the exact quantity to be determined by what the two parties negotiate, and until that's known it's pointless to talk about the net value of the piece that Verizon is buying?
Good question. As I pointed out above, after looking at the balance sheet history, it appears that the bulk of Yahoo's liabilities are tied to the Alibaba investment. Those liabilities will understandably follow that asset, and shows just how ridiculous the math is that people here are using here. Alibaba is not worth what is on the asset side. It is worth that value minus the liabilities specifically tied to that asset.
> You cannot just subtract the value of Alibaba and declare the company "less than worthless".
I can and do.
> Company valuations don't work that way
I disagree, except if you care to shell out <10 million and say "see it's worth something!" which is disingenuous. The amount to maintain the remnants will dwarf the cost of acquisition, making it a net loss.
Then you're wrong. That isn't how company book value works. A company's book value is the total of its assets minus the total of its liabilities. Removing an asset from the calculation without adjusting the liabilities is just wrong. It isn't proper accounting.
> I disagree, except if you care to shell out <10 million and say "see it's worth something!" which is disingenuous. The amount to maintain the remnants will dwarf the cost of acquisition, making it a net loss.
What numbers do you have to support this? What portion of Yahoo's liabilities are coming along with the assets Verizon wants to buy?
> Yahoo’s total market cap is less than the $40.5 billion, and after accounting for the cash on the company’s balance sheet, this means Yahoo’s core business is valued at less than $0. Now, this isn’t a new development that will disappear with some quick arbitrage. In fact, the value of Yahoo’s core business has been negatively valued for more than a year, so investors are seeing the value discrepancy measured by traditional means but just don’t believe in the company’s trajectory.
That article is making a different mistake. It is looking at market cap versus total assets. That isn't a very good measure and does not mean investors place negative value on the core business. Yahoo's book value is only about $27B, which is the amount that would be left if the company were liquidated today (notwithstanding liquidation costs). Since their price/book ratio is greater than 1 it means investors do put value on the future business, albeit not very much.
I mean, she hasn't done any miracles, but it's not like any of us would have done any better in her position. I wouldn't call her a terrible CEO, just someone that took over a company that was very difficult to turn around to begin with.
Marissa Mayer has done some things to try and right the ship initially.
1. Reduce flex time or work from home: The logic on doing this was questioned at the time, but working with your colleagues in a confined space has proven to be beneficial (Pixar, Yahoo, almost any start up)
2. Developing child care policies that included having the kid be close to her (or this could be Marissa Mayer).
However, she allowed herself to become a larger than Yahoo personality. How many articles were about her describing her life, things she did, she was promoting her brand, not that of Yahoo. She then fell into the acquisition trap of getting Tumblr.
"Reduce flex time or work from home: The logic on doing this was questioned at the time, but working with your colleagues in a confined space has proven to be beneficial (Pixar, Yahoo, almost any start up)"
Pixar and startups work well not because they are in a confined space but because they have a good company culture that allows people to do their job. Things like reducing flex time and remote are just surface changes that avoid addressing the deeper issues. My company does the same: At every step people are discouraged from making changes. Management complains about lack of innovation so they do "innovation days" and put up innovation posters. But they still squash any good ideas people have because the next deadline is always two weeks away so there never is time to think about things.
I wouldn't say she had no strategy, but that her strategy didn't work.
But then I think any strategy that started with "This is how we're going to save Yahoo" was doomed to fail. The brand is synonymous with Web 1.0 and was tarnishing their acquisitions.
A strategy of "This is how we're going to leverage Yahoo's assets" would have been a better starting point. Yahoo should have become a parent company, like Alphabet, that stays silent and out of the way. Then run down the Yahoo brand while building the acquired brands and re-branding the successful parts of Yahoo as something else.
She inherited a mound of shit. The one mistake I'll admit she made was not gutting management when she came in. It is, and was, completely dysfunctional at the management level. The only people rewarded were those willing to play the political games.
Yahoo did serve one purpose, it was the exit system for a lot of almost successful startups. Hope that continues under Verizon, though I doubt it.
On Mayer, well eh she put her hand up and suffered. but then Yahoo was pretty much past saving. Hopefully, she's learned from her mistakes and moves to something more productive.
The macro economically productive "purpose" of a start-up is to make profit, not to "exit". Until this is understood and forced by the economy, the overall economic climate in the US will continue to deteriorate.
The purpose of a company is to make money. There is no disagreement there. But the fact that economic climate in the US is deteriorating is bunk, and double bunk that even if it were, it would be related to misunderstandings of the purposes for which startups are founded and run...
Why would you hope that continues? They validated startups that probably wouldn't have been validated by any other means. Unless you're an investor, that's probably a bad thing, not a good thing.
Yahoo! has three major assets: its stake in Alibaba (worth about $32B), its stake in Yahoo! Japan (worth about $8.5B), and its core internet business. Verizon would only be buying that last piece.
While it is fun to do the subtraction and see that Yahoo's core business is negatively valued, liquidating the Alibaba and Yahoo Japan assets would come at the expense of significant taxes, which I believe accounts for why shareholders value the firm the way they do. Still shocking how drastically small the core asset valuation is in comparison to a deal Yang struck years ago, but it might make the valuation make more sense.
Also, the simple subtraction ignores that the drag on Yahoo's value is debt. If Yahoo sold their stakes in Alibaba and Yahoo Japan the cash would presumably be used to pay off that debt. It is incorrect to tie all of the debt only to the core business.
That is just the "current" debt. They also have almost $15B in long-term liabilities, primarily $13.5B in deferred tax payments and $1.2B in general long-term debt.
Is Verizon Wireless still injecting tracking headers into cellular data traffic? If so, how will these new acquisitions affect the way that these headers can be used?
I have mixed feelings about this. I still use Yahoo once or twice a week to read their news feed, and I am a long time Verizon customer (although my wife and I are considering saving a lot of money each month and switch to Google Fi when we need new phones).
I would hope that a media company like Yahoo could have existed independently from a parent company.
This certainly seems to make the most sense. It does seem like Verizon is chasing the past with this acquisition, going for Internet 1996 and Internet 2000 rather than the mobile future. (I don't buy Mayer's contention that Yahoo is now a mobile company)
I don't think they would have any regulatory challenge. Remember comcast invested in Vox media earlier?
Not sure how will the net neutrality be affected with this acquisition, but this is mostly done to build a huge media/entertainment(Yahoo! + AOL) business which will be complementary to Verizon's current offerings.
Yahoo Fantasy Sports is very popular, considered by many to be the best online fantasy sports site.
Yahoo Finance is popular.
Yahoo Mail has a lot of people who would do anything to continue using it.
Digging around a bit, here's what they consider to be their "core services" that are getting their focus lately: Search, Mail, Tumblr, Sports, News, Flickr, Lifestyle and Finance. You can argue more about some of those than others.
> Yahoo also reported Monday that it's writing down $482 million in charges related to the declining value of Tumblr, the social-blogging service that Yahoo acquired for $1.1 billion in 2013. Combined with an earlier write-down of $230 million, that indicates Tumblr's value has plunged by almost two-thirds.
Wow, i gotta say this is like Time Warner/AOL. Perhaps the internet is more mature now to make this work but Im not holding my breath. How will they reconcile the 2 adtech stacks which are huge messes in and off themselves.
I can imagine 3 years from now tech journalists will be writing that "history repeats itself". I can foresee that 3 things will happen:
- There will be a people drain from Yahoo. Anyone was is passionate about Yahoo will feel completely disenfranchised with being merged into a smaller competitor that is owned by a larger company. Some people will hold out for being made redundant in the hope of a good severance package, and some will simply stay regardless, but those who see what is happening will realise that Yahoo is over, and won't want to be a part of the frankenstein being assembled within Verizon.
- Yahoo's main properties (Homepage, Weather, Finance, Mail) will survive, Flickr/Tumblr I don't know. Tumblr itself has suffered from the difficulties of merging into Yahoo's culture and way of doing things. Flickr was resurrected in some ways, but struggles from the difficulties that other web 2.0 brands have - how to stay relevant and interesting to consumers today when the industry has changed so much since their creation.
- Mayer will go. She tried and she didn't succeed. She'll get a decent severance package, but Tim Armstrong will finally get what he's wanted for a long time. Whether he's able to successfully merge two large-sized businesses together I don't know, this is a different challenge compared to acquiring businesses like Goviral or Millenial Media, we're talking about a headcount of ~8000 employees, and there will be lots of duplicate roles. I don't expect the merger to go smoothly - I expect it to be a bit messy.
Either way, the goal of creating a relatively strong #3 to Google and Facebook seems at this point a lost cause - both Google and Facebook have market valuations that dwarf what AOL and Yahoo were worth at the time of their merger, and given a signal of what we might see in the next couple of years.
From what I've read, it appears unclear as to what Yahoo defines to be its "core business". Are there any details on what specifically Verizon is seeking to acquire, and whether Flickr is included?
> For 3.5 billion (rumored price), I'm surprised Google wouldn't take a flyer on Yahoo.
If they anticipate substantial antitrust scrutiny of the deal (and I would think Google buying Yahoo! would have to in ways many other suitors would not), it might not be worth the purchase price plus the cost associated with the scrutiny.
Somewhat unrelated but: Since the Government is already tapping into wired and wireless networks without consent, it would be nice if they would take control of all ISPs... we would probably get better cellphone service at least.
"Ma Bell, proud owners of both AOL and Yahoo." Clinton running for president. You would be forgiven for asking if it was the 1990s. It's hard for me to be excited by any of this. Those are three really dull companies.
There's ~0 chance of that happening. Verizon can afford to completely write off $5 billion, so you would need some sort of poisonous cultural inversion for the deal to sink Verizon.
(Verizon is a much larger company, so if the Yahoo culture ended up dominating it would be an inversion)
Verizon is really doing a big transition with this acquisition and their AOL acquisition. They've acquired alot of valuable web space to put adds on/monetize. This is a probably good news for Yahoo employee's as Verizon then has a vested interest in keeping the company running and not splitting it up into pieces like a PE firm may be more inclined to do.
The one interesting thing I've heard is that Verizon isn't interested in Yahoo's patent portfolio, which means it could still be up for grabs.
Hopefully its bought by a Microsoft/Google consortium and very liberally cross licensed rather than a private equity firm who will look to more aggressively monetize it.
I also heard that Tim Armstrong, formerly of Google with Mayer will lead the combined AOL/Yahoo company, which means that Mayer probably isn't coming along as part of this deal. I think most people expected this.
If this ends up going through for the reported 3.5 billion, then Verizon has bought a significant portion of traffic on the web for roughly 8 billion (AOL was acquired for 4.4 Billion).
This could end up looking like a very good acquisition in a few years!